A number of studies suggest that correction - either through prompts that point out the error to a student and require an immediate attempt at a "repair" or through "recasts" when teachers rephrase correctly what the student said - can be a useful tool to assist language acquisition.
Other research, however, suggests the opposite - that overt grammar correction can actually be harmful to the English Language Learner. Some researchers suggest that oral grammar correction interrupts communicative activities and can generate a negative reaction from students to public correction. These studies point to similar hindrances resulting from correcting written grammatical errors, saying that it contributes to stress that inhibits language learning.
These two points of view partially rely on varying perspectives on the difference between language "acquisition" and language "learning." To "acquire" language, according to many who question the use of error correction, it is important to have a greater emphasis on communication rather than the correct form. Researchers like Stephen Krashen would suggest that "learning" a language in schools can, instead, focus too much on the correct forms through grammar instruction and worksheets and not result in students actually being able to communicate effectively in the real world.
I share the concerns of those who question the advantages of error correction. However, I still believe that error correction does have a place in the ESL classroom.
Regular use of concept attainment (see my previous British Council post on that strategy) using both correct and incorrect grammar usage (without identifying the student who committed the error); using games to have students correct common grammar errors (for example, teachers could write examples of common writing errors on the board and have small student groups race to write them correctly); and the use of "recasts" in Dialogue Journals as described in a previous British Council post are all teaching strategies I use frequently in my classroom that I believe reinforce the "acquisition" aspect of language-learning.
In addition, instead of returning student-written papers where we point out numerous errors, teachers might emphasis several positive aspects of an essay and then only point out one type of error.
Error correction is a commonly-discussed question about ESL/ELL educators, and I've brought together a number of related articles and posts at The Best Resources On ESL/EFL/ELL Error Correction. I hope readers of this post will contribute even more thoughts and ideas based on their classroom experiences.